• QCS Market Report 17 September 2018

    Sugar

    • Consecutive weeks of gains were brought to an abrupt end last week, as prices took the elevator down on Friday.
    • Chatter around significantly larger Indian export subsidies saw the prices just shy of 50 points lower after the open.
    • The latest COT report released as expected, with specs reducing their net short position from 188,738 to 163,835 lots.
    • In the face of higher ethanol prices, the Brazilian real continues to weaken as further global trade discussions contain the emerging markets currency.

    Macro/currency commentary

    • It was a quiet start to the week for the AUD, oscillating around USD 0.71.
    • Thursday was the highlight of the local calendar, with the release of better-than-expected unemployment data. As a result, the AUD traded near the week’s high of USD 0.7229.
    • The AUD’s run was stunted on Friday night as the US rounded out the week with a strong non-farm payrolls print, and it closed the week near USD 0.7150.
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  • QCS Market Report 13 September 2018

    Sugar

    • Sugar producers across the market have enjoyed the recent lift in sugar prices over the past two weeks. After trading at prompt life-of-contract lows, the soon-to-expire October18 contract staged a rally, seeing it above 11 USc/lb.
    • In India, the government is yet to provide an export policy, but in an election year, it seems inevitable it will do all it can to incentivise exports.
    • Friday night’s Commitment of Traders (COT) report stunned many as the specs moved to a record 188,738 lots net short.

    Macro/currency commentary

    • A bumpy ride for the AUD over the past week, oscillating through USD 0.7160–0.7230.
    • The RBA met on Tuesday, leaving rates on hold as expected. The accompanying statement (which was the main focus for most) maintained a neutral stance, without mentioning the highly publicised independent rate increases passed on by local banks
    • The AUD opened higher on Friday, before gains were pared back on firming US data on Friday night.
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  • QCS Market Report 9 August 2018

    Sugar

    • The global surplus remains at the forefront for the sugar market.
    • There is potential to see the lower end of 10.50 USc/lb, but at what point do we bounce?
    • Ethanol parity is seemingly capping the market out at 12 cents.
    • Risk, as has been the case for the majority of this year, remains to the downside.

    Macro/currency commentary

    • Despite the trade war being played out by the US and China, the AUD keeps bouncing off USD 0.7350.
    • There remains no good new news for the AUD, as it gyrates in the USD 0.7350–0.7450 range.
    • Domestic data more recently has been positive, with the RBA keeping rates on hold this week.
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  • QCS Market Report 31 July 2018

    Sugar

    • Again, there appears to be no good news about the market this week.
    • This week we saw spreads weaken—most notably, October/March—and Thai premiums soften, given an uptick in exports.
    • Brazil’s harvest slowed as more mills shut, favouring ethanol over sugar.

    Macro/currency commentary

    • It was more of the same for currency markets last week, as the AUD continued to spin its wheels.
    • Despite small losses on the week, the AUD managed to hold a USD 0.74 handle.
    • Looking ahead, the data calendar fires up again this week, with local and international data scheduled for release.
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  • Weekly Market Report 17 July 2018

    Sugar

    • Raw sugar futures were lower across the board this week, with the prompt October18 contract finishing the week below 11 USc/lb.
    • Price action was largely one directional all week as ‘no news’ has been perceived as a reason to continue to sell.
    • The numerous Thai and Brazilian producers with substantial hedging left to complete will limit any bounce, as the market gyrates in the 11–13 USc/lb range.

    Macro/currency commentary

    • Trade wars were back into the fray in a bigger and nastier manner last week, with investors becoming more risk averse about the potential effects of a trade war.
    • AUD price action heated up on Wednesday after headlines claimed the US would impose additional tariffs on Chinese imports, sending the AUD sliding to 14-month lows at USD 0.7361.
    • In the week ahead, the RBA July meeting minutes are due out, with important employment data released on Thursday.
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  • Weekly Market Report 20 June 2018

    Sugar

    • Raw sugar futures struggled to hold in the face of persistent downward pressures around anticipated output in major producing regions
    • A considerably weaker Brazilian real afforded producers an opportunity to do some pricing.
    • Looking ahead, there is mention of a potential El Nino weather event, although Thai and Indian crops are unlikely to be disrupted, given timing.

    Macro/currency commentary

    • Despite a disruptive weekend following the G7 summit in Quebec, currencies started the week relatively quietly.
    • As expected, the US Fed lifted rates another 25 bps, signalling that another two hikes in 2018 are likely.
    • The AUD moved lower in response to the central bank’s statement and has continued to slide since.
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